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MGT 431 Total Compensation and Method Paper WEEK 4 TEAM PAPER




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Total Compensation Methods Paper

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Total Compensation Methods Paper
Many organizations and employees have opinions of how compensation in the company
should be and what method of compensation works in comparison to another. Exploring the
effects of the methods will determine what compensation each organization will use. Benefit
programs are more popular than in past years because of the health issues today. Organizations
are using benefit programs to attract employees and keep good workers for longevity.
The employee salary, benefits, and compensation are strategies in the organizations
recruitment of top quality employees. Organization should ensure the salaries, benefits, and
other incentives are in accordance with the employee’s needs and what the competition is
offering. According to the Journal of Business and Psychology, 2005 website, which states,
“However, because of changing employee and employer needs, coupled with stagnant reward
systems and outdated benefit plans, most compensation/benefit programs are far from optimal
and almost all programs will undergo substantial redesign in the next decade” (Schiemann, p. 1).
Compensation methods
Compensation methods are vital assets of a strategic plan to reach maximum success.
Although it is not the only factor that will determine accomplishment or failure, compensation
works hand-in-hand with the very people who keep the doors open every day. Compensation
methods are part of a chain reaction that ultimately lead to reaching goals and achieving
maximum success. Employees are the ones that determine the quality of work put into the
organization daily along with the speed of production. Employees are also behind the satisfaction
of consumers and fellow coworkers. How these employees feel about coming to work every day
will affect what they put into the organization. Compensation methods can make an individual

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believe he or she is fairly treated, respected, needed, and paid equally to his or her skills and
creativity. Pay is an important factor in satisfying employees but cannot stand alone in the
foundation of pleased employees.
“Today, compensation means a lot more than just “flat rate.” Compensation must be
stable and reflect the quality of employee that the shop wants representing them in the
community” (Longnecker, 2004). With each organization unique compensation methods must be
used to satisfy unique needs. Compensation methods such as yearly bonuses in a sales
environment will lead to more motivated employees who strongly thrive to sell and provide
quality customer service.
The employee has something to look forward to and work for. Methods such as
commission lead to employees who focus on making as much money as they can, which improve
both the organizations and their own financial standings. Compensations as simple as cash
rewards when achieving a set goal can impact an organization. Employees will increase their
knowledge to work harder reaching the goals of the organization and putting more money in their
pocket. Compensation methods are a way to boost productivity and make more money for
organizations of every type. These methods positively impact the employees who pass it along to
the organization and more important consumers.
Benefit programs
According to Susan M. Heathfield, (n.d.), “benefits are a form of compensation paid by
employers to employees over and above the amount of pay specified as a base salary or hourly
rate of pay” (Benefits, para. 3). Pay and benefits together make up the wage costs within an
organization. Typically, benefits are divided into those that are required and those that are

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